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Friday, 26 June 2015

How is 4% real GDP growth for a decade economically possible for the U.S.?

That's a question professor John H. Cochrane has reflected on. As the biggest obstacle to GDP growth is a political one, Cochrane lists a set of "pro-growth policies" that could help achieve 4% real GDP growth for a decade,

The tax code is thoroughly reformed to do nothing but raise revenue with
minimal distortion -- a uniform consumption tax and no income, corporate, estate
etc. taxes, or deductions.

A dramatic regulatory reform. For example

Simple equity-financed banking in place of Dodd-Frank.

Private health-status insurance (with, if needed, on-budget voucher
subsidies) in place of Obamacare.

An end to the mess of energy subsidies and interference. No more fuel
economy standards, HOV lanes, Tesla tax credits, windmill subsidies, and so on
and so on. (If you want to control carbon, a uniform carbon tax and nothing
else.)

Many agencies cease to exist.

No more endless waits for regulatory decisions.

No more witch hunts for multibillion dollar settlements.

Thorough overhaul of social programs to remove disincentives. Most help
comes via on-budget vouchers.

No more agricultural subsidies.

No more subsidies, period. Fannie and Freddie closed down.

Unilateral free trade.

Essentially open immigration -- anyone can work.

Much labor law rolled back. Uber drivers can be contractors, thank you. Most
occupational licenses removed -- anyone can work.

Drug legalization.

School vouchers.

And so on. Essentially, every single action and policy is re-oriented toward
growth.